7) The following information is from Carter Corp.’s year-end financial statements.: Cash $150 Accounts Receivable $175 Short-Term Investments $300 Prepaid Expenses $75 Land $1,000 Equipment $950 Accumulated Depreciation $625 Accounts Payable $275 Salaries...

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Accounting

7) The following information is from Carter Corp.’s year-endfinancial statements.:
Cash $150
Accounts Receivable $175
Short-Term Investments $300
Prepaid Expenses $75
Land $1,000
Equipment $950
Accumulated Depreciation $625
Accounts Payable $275
Salaries Payable $25
Interest Payable $100
Long-Term Notes Payable $300
Long-Term Loans Payable $400
Total Revenues $2,500
a) Calculate Carter’s current ratio, quick (acid test) ratio,and days’ sales ratio for the year. (Last year Carter’s accountsreceivables were $225.)
b) Last year, Carter’s current ratio was 2, Carter’s quick ratiowas 1.4, and Carter’s days’ sales ratio was 31 days. Comment onwhether these ratios have improved or worsened this year.

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3.6 Ratings (571 Votes)

Ans A 1 Current assets Amount Current liabilities Amount Cash 150 Accounts payable 275 Accounts receivables 175 Salaries payable 25 Short term investments 300 Interest See Answer

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Cash	$150
Accounts Receivable	$175
Short-Term Investments	$300
Prepaid Expenses	$75
Land	$1,000
Equipment	$950
Accumulated Depreciation	$625
Accounts Payable	$275
Salaries Payable	$25
Interest Payable	$100
Long-Term Notes Payable	$300
Long-Term Loans Payable	$400
Total Revenues	$2,500